This is the first reported age discrimination case dealing with the thorny issue of flexible benefits schemes; in particular the implication of age-related premiums in the private medical insurance component of such a scheme.  However, the Tribunal seems to have “glossed over” the more challenging issues in this case.  As far as we are aware, this case has not been appealed to the EAT.


In this case, GHL, who had a high turnover of staff and were performing less well than its competitors, sought to improve the recruitment and retention of staff.  GHL concluded that one way of achieving this was to provide a flexible benefits scheme allowing employees to choose benefits that met their lifestyle needs such as childcare vouchers or increased holiday.  A survey of GHL’s employees confirmed that the most attractive benefit for staff was the opportunity to purchase private medical insurance.

Under the flexible benefits scheme which was introduced, all non-management employees with less than 5 years’ service were allocated a “flex fund” of 5% of their basic salary. 

The cost of the private medical scheme offered to GHL employees as part of the scheme was based on age and gender tables.  This meant that a 20 year old female would pay a premium of £256.44, while a female of 60 would pay a premium of £860.40.

Ms Swann was 51 years old.  She was primarily interested in purchasing private medical insurance with her “flex fund”.  The premium payable for her private medical insurance, based on her age and gender, was £631.56.  However, her “flex-fund” was only £462.50.

Ms Swann brought a claim of direct age discrimination in the Tribunal, complaining that the premiums under the private medical insurance component of the flexible benefits scheme were age-related and therefore more costly for her.  She alleged that this amounted to less favourable treatment on grounds of age.  GHI however argued that the benefit which they provided to all employees was an amount of money, based on a percentage of their salary, and that this was not age-related or discriminatory.


By a majority, the Tribunal agreed with GHI and found that the “relevant act” in determining whether Ms Swann was “subjected to less favourable treatment” was GHI’s decision to put a flexible benefits scheme in place.  The majority held that this act was not age-related and that employees were free to choose which benefits they wanted to take up.  Accordingly, Ms Swann had not been subjected to less favourable treatment on grounds of age.

Although the Tribunal had found that there was no age discrimination, given the novelty of this case, the Tribunal went on to consider whether, if GHI’s treatment of Ms Swann was found to be discriminatory, it could be justified as being “a proportionate means of achieving a legitimate aim”.  Again, the Tribunal’s decision (by a majority) was that the aim of the scheme (to improve the recruitment and retention of staff) was a legitimate aim.  

Further the Tribunal considered that the introduction of the scheme was a proportionate means of achieving that legitimate aim. The Tribunal held that the premiums within the Scheme were based on actuarial assessments of the risk of an employee making a claim, and could be reduced after the first year depending on the employee’s actual claim history.  Accordingly, it held that the scheme was a proportionate means of achieving a legitimate aim.